8 reasons why you should own gold

Dear readers,

Here’s 8 reasons why you should own gold.

  1. Gold is not money. Gold is value. It is the most liquid asset that is accepted around the world.
  2. Gold is useful as money because it is valuable & portable. It’s also rare & not easily counterfeited. Gold is fungible & exchangeable because every bit of .999 fine gold is similar enough to be like another. Gold does not rust or decay so it’s imperishable. These properties make gold a good store of value, a medium of exchange, and a unit of account.
  3. While other investments like shares can devalue to zero (Enron), the value of gold can never go to zero. Paper money is a promise to pay while gold is payment in full. Bear in mind that promises can be broken or defaulted. Gold is not a promise, gold is wealth. Currencies can also devalue to zero, and all paper currencies in the history of the world have devalued to zero in time.
  4. Retail investors are recognising what is unfolding. They are seeking an alternative to paper currencies and financial assets and this will create an enormous investment demand for gold. To facilitate this demand, a number of new vehicles like Central Gold Trust and gold Exchange Traded Funds (ETF’s) are being created.
  5. Gold cannot be taxed away (if they don’t know you have it in the first place) or inflated away (the government cannot create more of it easily).
  6. Gold is increasing in popularity. Countries like China and India have been accumulating gold. People in Vietnam have to use gold to buy houses!
  7. Comparing to price of crude oil, the price of gold is undervalued relatively speaking. Oil has almost tripled while the price of gold only doubled since the recent low. Especially with a Peak Oil in the global oil production, when oil rises, gold inevitably will rise together.
  8. The decline of the Dollar due to the current sub-prime mortgage crisis has contributed greatly to the recent increase in gold prices. Do you anticipate recovery in the Dollar any time soon? I would expect it to fall further.

Should you own some gold now? Well, it’s up to you.

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